“Ethical finance” is not, as is often believed, an invention of very recent years linked to a greater sensitivity of younger investors towards an economy that is environmentally sustainable and socially responsible.
According to some analysts, the pioneers of this type of investment were in fact American businessmen who, for religious reasons (they were Christian Quakers and Methodists), did not want to support the slave or arms trade, and later also in tobacco and alcohol. At the beginning of the twentieth century, the first “responsible” investment funds were born in the United States, which excluded companies operating in these sectors from their portfolios.
A further development of so-called “responsible” investments took place, for example, in the late 1970s and early 1980s, when many investors decided not to give their money to companies linked in some way to the South African regime, in which apartheid was in force. This heightened sensitivity led to a notable decrease in investment in South Africa, especially by US companies that feared losing their investors.
There are no uniform international standards to classify “ethical investments”, even if from March 2021 the Sustainable Finance Disclosure Regulation (SFDR), the first regulation with which the European Union regulates sustainable investments (i.e. it gives the criteria to determine whether they are sustainable or not). In general, ethical funds refer to the principles for responsible investment (PRI) so-called “ESG”: E stands for environmental, ie “environmental”, S for social, ie “social”, and G for governance, that is, good corporate governance. “Ethical finance” is that which evaluates companies on the basis of respect for human rights and workers’ rights, the relationship they have with their employees and with the inhabitants of the areas in which it operates, but also on the basis of ” governance“, Such as compliance with tax regimes, executive salaries, the presence of corruption and the process of appointing directors.
Therefore, ethical finance includes in the package of its investments the economic sectors considered “ethical” regardless of whether they are sustainable from an environmental point of view. However, these issues can be included, together with the others, in the evaluation of unethicality, such as investments in sectors considered to have a high impact, for example those of coal and oil. In general, the sectors considered “unethical” are, among others, those of arms, gambling, tobacco or companies involved in negative episodes in the context of corruption or respect for workers’ rights.
Etica SGR, an asset management company of the Banca Etica group, founded in 2000, has focused its proposal of mutual funds that invest in realities that guarantee ethical standards from an environmental, social and governance (ESG in fact) with a longer-term look and a potential added value in terms of returns. It offers its mutual funds to both private savers and institutional investors (such as banks, insurance companies, pension funds, pension funds, governments and local administrations).
Etica SGR, which manages assets of around 6 billion euros and has 350,000 customers, has codified the “ESG” criteria in a methodology that allows for more rigorous management of investment risk than traditional funds. According to Francesca Colombo, Head of Analysis and Research at Etica SGR, during the coronavirus pandemic, in a climate of great uncertainty and volatility in the financial markets, ethical and responsible funds have withstood the crisis better because they are generally medium-term investments. long term (and therefore by their nature less sensitive to market fluctuations), but also thanks to the selection of the “ESG” methodology, which for example excluded from the possible companies in which to invest those in the oil and mining sectors, among the most affected by crisis.
Furthermore, to contribute to an ethical response to the pandemic, Etica SGR, together with about 150 international investors, joined the initiative promoted by the ATM network (Access To Medicine, an organization that fights for access to medicines for all) which launched an invitation to joint efforts for the development, production and guarantee of equal access to coronavirus treatments and vaccines, especially in the poorest countries. The initiative is called Investor statement on Covid-19 in advance of G7, G20 and ACT-Accelerator Facilitation Council and the signatories, who together manage assets worth more than $ 14 trillion, have also pledged to stimulate healthcare companies to take more vigorous action to help accelerate the end of the pandemic.